Bokusgruppen's (STO:BOKUS) Dividend Will Be Increased To SEK1.80

Bokusgruppen AB (publ)'s (STO:BOKUS) dividend will be increasing from last year's payment of the same period to SEK1.80 on 14th of May. This makes the dividend yield 6.9%, which is above the industry average.

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Bokusgruppen's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Bokusgruppen's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

Over the next year, EPS is forecast to expand by 70.0%. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 93% - on the higher side, but we wouldn't necessarily say this is unsustainable.

See our latest analysis for Bokusgruppen

Bokusgruppen Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 3 years was SEK3.00 in 2022, and the most recent fiscal year payment was SEK3.60. This means that it has been growing its distributions at 6.3% per annum over that time. Bokusgruppen has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

Bokusgruppen's Dividend Might Lack Growth

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Bokusgruppen has impressed us by growing EPS at 52% per year over the past five years. Although earnings per share is up nicely Bokusgruppen is paying out 139% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

Our Thoughts On Bokusgruppen's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Bokusgruppen's payments are rock solid. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Bokusgruppen is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Bokusgruppen that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.